Is garment industry compliance fundamentally flawed?

Compliance in the global garment industry is fundamentally flawed, and has been from the beginning, according to industry expert David Birnbaum. In order to bring about change, he suggests, the industry must face up to these flaws, and work towards a single standard of compliance.

The Tazreen Fashion factory fire in 2012 and the Rana Plaza building collapse a year later brought the issue of compliance firmly to the fore for garment retailers, brands, factories and consumers. And while huge investments have subsequently been made into improving worker and building safety, a massive problem still remains.

"What is ironic is that while everyone is making this move towards greater fire safety, they are doing nothing about compliance," Birnbaum says. "Workers still have the same 16-hour days, one day off a month, there is still child labour, and nobody is ringing improvements. This is the fundamental problem facing us when we look at compliance."

Birnbaum believes that from the outset 30 years ago, when customers began enforcing minimum standards for worker conditions in their supplier factories, compliance has been flawed. And he suggests that for progress to happen, the industry needs to collaborate.

Unintentional flaws

He points to two types of flaws: Unintentional and negligence.

Of the former, he explains: "Firstly, customers decided to use a local labour law for the standards of compliance in a particular country. They didn't realise these might be skewed towards factory owners, so the minimum wage might be below the amount to allow a factory worker to have a roof over his head and food on the table.

"The second issue was that in many cases different customers had different standards of compliance and those might disagree from one to another. For a factory with multiple customers, it was impossible to be in compliance with every customer at the same time."

Birnbaum also points to the problem of audit outsourcing, when a customer expands into a new country but doesn't have the staff to carry out the inspections.

"The quality of the inspections differed from country to country. And they weren't real audits. The audits that take place in the garment factory are not subject to fines. Nobody has ever taken one of these companies to court for a failed audit."

Negligence flaws

Beyond the unintentional flaws, however, are the negligence flaws as customers, factories, and governments in garment exporting countries jump on the compliance bandwagon, regardless of whether they are serious about it or not.

"When the industry created compliance standards, they never told the public what those standards were. It was kept a secret. This lack of transparency has led to serious problems."

He offers an example. "One of the greatest problems is the myth that the US garment industry was driven out of business by cheap labour from Asia. In 1955, the US was not only the world's largest garment producer but the world's largest garment exporter. Now, locally produced garments represent maybe 2.5% of garment sales, which means that 97.5% of all the garments sold in the US are imports.

Drawing comparisons with the EU, he points out that 48% of its imports come from other EU countries, workers are paid more than those in the US, and the EU has "far more free trade agreements than garment producing markets than the US.

"The fact is, it wasn't cheap labour that destroyed the US garment industry. We have a story to tell about legitimate compliance and we have to bring the consumer into reality."

That reality, Birnbaum says, is that the garment industry is located in developing and least developed countries where the industry should not be looking at how high the wage is, but what that wage buys.

"The workers are entitled to a wage where they and their family have a roof over their heads, three meals a day, and some sort of minimal luxury."

A further issue he highlights is that the bandwagon loaded with serious, and not so serious, contenders meant that compliance never achieved the power it should have.

Compliance confusion

More specifically, he says that neither the Tazreen or Rana Plaza disasters were failures of compliance, but were instead manslaughter.

"The people died not because the aisles were cluttered or the emergency doors were locked, they died because as the fire went from door to door, the supervisors made sure workers remained sat at their desks working. It wasn't an issue of compliance. It was manslaughter. The customer is not obligated to go into the factory building and take drawings of the wall before they do the job."

Birnbaum believes failures in compliance, low wages and overtime, have all led to a sense of confusion across the industry, creating a myth that the consumer that wants cheap garments at retail has to accept people working for slave labour.

"That is fundamentally, completely untrue. Wage rift has very little to do with the garment price." Increasing productivity, he says, brings down overheads and allows a factory owner to pay workers a higher wage.

"A 30% increase in productivity, giving the worker a 30% increase in wage, would bring overheads down so far that the savings on overheads would be greater than the total cost of labour. So if you want to increase productivity, send in the engineers. If you want a cheap garment at retail, you don't have to have terrible working conditions."

A shift in perceptions

Birnbaum points to companies such as Esquel Group, TAL, and Crystal Group that are in total compliance; a handful of around 30-40 globally that are models of such. He also praises firms such as UK retailer Marks & Spencer, and US giants Levi Strauss and VF Corp for their historical ethical sourcing. "These companies are at the cutting edge of compliance."

But while Birnbaum admits that ideas surrounding compliance are slowly changing, he says that if real change is to happen, the industry has to recognise three obvious flaws.

We have to learn, after 30 years of failure, that compliance standards have to be independent of government regulations. I'm not saying the factory shouldn't follow government laws…but if a factory wants to work with a customer, it has to follow the customer's specifications to reinforce compliance.

You can't outsource inspections. The inspections have to be done by the customers themselves.

We have to accept that compliance will not be for everybody. There are customers and factories who will always try to cut corners and an attempt to bring everyone into the system will make the system corrupt. So it has to be limited to the customers and the factories that are serious about this. They have to get together and they have to form a single standard of compliance.

Elaborating further, Birnbaum emphasises that compliance is not a national or government issue.

"The government can be thoroughly corrupt, as many of these governments are, and have a decent garment factory industry that is compliant. It isn't about the country. It's not about the government. It's not even about the industry. There are factories in LA that are worse than factories in Bangladesh. Compliance is about the factory and it has to be done one factory at a time."

There is clearly work underway, particularly from the Alliance for Bangladesh Worker Safety and the Accord on Fire and Building Safety in Bangladesh, both of which have made massive strides in improving worker safety. This, however, isn't enough to make a real difference, and it's not addressing the right areas of compliance Birnbaum believes.

"We are waiting for the next shoe to drop. We had Tazreen and Rana Plaza, and we will have another disaster, because even the money they're putting in isn't getting the work done. The key factor is sub-contracting. It's the worst problem compliance faces. They're inspecting 1,500 factories in an industry that has 5,000 factories. I don't see a future for Bangladesh. I could be wrong but I see the industry moving to safer ground."

If the industry is successful, Birnbaum says, it will break into two: compliant and non-compliant.

"The compliant industry will be made up of the serious customers and the serious factories, and they will take a commanding role in the industry. This is the future. You have young people now who have a different view of fashion; more than style and fit, it has to be about transparency. They want to know the garment they buy is being made in a decent factory. So the industry has to change to suit the consumer.

"The consumer is doing their part. Now we have to press on and move ahead in the same direction to effect change."

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